Correlation Between Paramount Global and Sycamore Entmt

Can any of the company-specific risk be diversified away by investing in both Paramount Global and Sycamore Entmt at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Paramount Global and Sycamore Entmt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paramount Global Class and Sycamore Entmt Grp, you can compare the effects of market volatilities on Paramount Global and Sycamore Entmt and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Paramount Global with a short position of Sycamore Entmt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Sycamore Entmt.

Diversification Opportunities for Paramount Global and Sycamore Entmt

0.64

Correlation Coefficient

Paramount Global  Sycamore Entmt

Poor diversification

The 3 months correlation between Paramount and Sycamore is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Sycamore Entmt Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sycamore Entmt Grp and Paramount Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Paramount Global Class are associated (or correlated) with Sycamore Entmt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sycamore Entmt Grp has no effect on the direction of Paramount Global i.e., Paramount Global and Sycamore Entmt go up and down completely randomly.

Pair Corralation between Paramount Global and Sycamore Entmt

Given the investment horizon of 90 days Paramount Global Class is expected to generate 0.23 times more return on investment than Sycamore Entmt. However, Paramount Global Class is 4.3 times less risky than Sycamore Entmt. It trades about -0.01 of its potential returns per unit of risk. Sycamore Entmt Grp is currently generating about -0.12 per unit of risk. If you would invest  1,135  in Paramount Global Class on September 15, 2024 and sell it today you would lose (13.00) from holding Paramount Global Class or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Paramount Global Class  vs.  Sycamore Entmt Grp

Paramount Global Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paramount Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sycamore Entmt Grp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sycamore Entmt Grp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Sycamore Entmt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paramount Global and Sycamore Entmt

The main advantage of trading using opposite Paramount Global and Sycamore Entmt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, Sycamore Entmt can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sycamore Entmt will offset losses from the drop in Sycamore Entmt's long position.

The idea behind Paramount Global Class and Sycamore Entmt Grp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.